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China’s government-controlled distributor China Film Group is releasing two of Hollywood’s biggest 3-D animated movies of the year on the same weekend, forcing the pair to compete head-on and potentially denting their ticket sales in the world’s second-most lucrative market.

By Ben Fritz, John Horn and Tommy Yang
LA times (July 12, 2012)

The movies — 20th Century Fox’s sequel “Ice Age: Continental Drift” and “The Lorax” from Universal Pictures — will both be released July 27. In the U.S. and elsewhere, the two family pictures were released months apart to avoid cannibalizing each other’s box office.

Jiang Defu, a spokesman for China Film, said the overlapping release dates were simply the result of a crowded calendar in the busiest month of the year for Chinese audiences. Twentieth Century Fox and Universal have not been informed of any official reason for the double-date release plans, according to executives close to both studios. But people familiar with the Chinese movie market who were not authorized to speak publicly speculated that the government may be intentionally attempting to limit each film’s take at the box office.

Figures released this week show that American films dominated the Chinese box office in the first half of the year. Although Chinese officials are proud of their film market’s rapid ascension — it is now the second largest in the world — the lack of Chinese blockbusters has been a sensitive subject for a country that wants to increase its “soft power.”

Forcing the American films to compete head to head could curtail their grosses and help boost homegrown movies’ share of the Chinese box office. Several U.S. executives noted that it’s unusual for China to open two movies targeting the same audience on the same date, particularly two 3-D pictures in a country where the technology is hugely popular. (In the U.S., studios try to avoid such face-offs by scheduling release dates early and changing them when competition crops up, but they have no control over how China Film schedules and markets their movies.)

Jiang dismissed such speculation, noting that the recently released Chinese movies “Caught in the Web” and “Painted Skin: The Resurrection” also opened the same week.

“China’s film market is very competitive. It’s very common to see many movies to go head to head against each other,” Jiang said. “Since blockbuster Chinese movies like those two can be released the same [week] in China, I don’t understand why two American movies can’t go head to head against each other.” He added that in a month in which seven or eight movies are typically released every week, “it’s really hard for a movie to enjoy a completely competition-free release.” Jiang said foreign movies also need to receive approval from Chinese censors, which can complicate release schedules.

China is the world’s second-largest movie market, trailing only the United States in ticket sales, generating more than $2 billion in box office in 2011 and on track to top $3 billion this year.

Even though China Film keeps about 75% of box-office revenue, maximizing profits might not be its sole concern, say people familiar with the state-controlled company’s thinking who did not want to be identified publicly because it might jeopardize their relationships with China. Government officials are believed to be worried that Hollywood movies have been performing far better than locally made productions, the sources said. Of the $1.25 billion in box-office receipts so far this year, 63% of ticket sales was generated by American movies, according to Robert Cain, who covers the Chinese on his blog Chinafilmbiz.

The most popular imports this year are the 3-D release of “Titanic” ($154.8 million), “Mission: Impossible — Ghost Protocol” ($102.7 million) and “The Avengers” ($90.3 million). Even the stateside dud “Battleship” has performed well in China, grossing more than $50 million.

Cain said two interests are competing for primacy at the Chinese box office. China Film wants to make as much money at the multiplex as possible, which leads to booking a series of American blockbusters. “They are probably happy to see them do well,” Cain said of China Film’s view of the popularity of American movies. But the Communist party, he said, could be disillusioned by the trend. “There’s a lot of concern — they want to promote Chinese values,” Cain said. “Purely from a propaganda perspective, it’s a big problem and probably embarrassing to the people in the culture industry — that moviegoers are rejecting their product.”

Backing up that theory is the fact that there has been an unofficial “blackout” on American movies in China for the last several weeks, despite a recent increase in the number of foreign films China allows to enter the country and share in box-office revenue. The last U.S. film allowed into the country was Disney/Pixar’s animated picture “Brave” on June 19. The next due for release is “The Twilight Saga: Breaking Dawn — Part 1″ on July 25.

One person close to the situation who declined to be identified due to the sensitivity of ongoing talks said Fox and Universal were still hopeful they could lobby Chinese officials to change the release date for one of the movies at the last minute.

Fox’s fourth “Ice Age” film, which launches Friday in the U.S., has already grossed more than $200 million abroad. Universal’s “The Lorax” opened in March and has grossed $313 million worldwide, with several major international markets yet to debut. Because it has been in release for several months, pirated versions of “The Lorax” are probably already widely available online and on DVD in China.

Although many Chinese students are on holiday, increasing the number of families available to go to the movies, the two similar films are certain to eat into each other’s attendance. In addition, they will be competing for the country’s more than 2,000 3-D screens.

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